marin-sonoma mosquito and vector control district
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT COTATI, CALIFORNIA BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2013
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I INTRODUCTORY SECTION Table of Contents ........................................................................................................................................................ i Board of Trustees ....................................................................................................................................................... ii
I FINANCIAL SECTION I fudependent Auditors' Report .................................................................................................................................... 1 Management's Discussion and Analysis ................................................................................................................... 3 Basic Financial Statements: District-wide statements: Statement of Net Position ...................................................................................................................... 7 Statement of Activities .......................................................................................................................... 8 Fund financial statements: Governmental Funds - Balance Sheet .................................................................................................. 9 Reconciliation of the Governmental Funds Balance Sheet With the Statement ofNet Position ............................................................................................... 10 Governmental Funds - Statement of Revenues, Expenditures and Changes in Fund Balances ........................................................................................................ 11 Reconciliation of the Net Change in Fund Balances - Total Governmental Funds With the Statement of Activities ................................................................................................... 12 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ............................................................................. 13 Notes to Basic Financial Statements ............................................................................................................. 17
MARIN-SONOMA MOSQillTO AND VECTOR CONTROL DISTRICT BOARD OF TRUSTEES JUNE 30, 2013
Term Expires Dec 31 81 Paul Libeu, President ..................................................................................................................................... 2014 Judith Trusendi, Vice President .................................................................................................................... 2013 Yvonne Van Dyke, Secretary ........................................................................................................................ 2014 Lee Braun, Treasurer ..................................................................................................................................... 2013 Steve Ayala ................................................................................................................................................... 2016 Nancy Barnard ............................................................................................................................................... 2014 Charles Bouey ................................................................................................................................................ 2014 Tom Bradner .................................................................................................................................................. 2013 Martin Castro ................................................................................................................................................. 2015 Tamara Davis ................................................................................................................................................. 2014 Frank Egger ................................................................................................................................................... 2015 Margaret Graham .......................................................................................................................................... 2013 William. "Billy" Holland ................................................................................................................................ 2016 Michael Kyes ................................................................................................................................................. 2013 Phil Paisley .................................................................................................................................................... 2013 Bill Pitcher ..................................................................................................................................................... 2015 Sandra Ross ................................................................................................................................................... 2013 Herb Rowland Jr ............................................................................................................................................ 2015 Ed Schulze ..................................................................................................................................................... 2015 Roger Smifu ................................................................................................................................................... 2014 Richard Stabler .............................................................................................................................................. 2013 Jim Wood ....................................................................................................................................................... 2013
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MAZE
&ASSOCIATES
INDEPENDENT AUDITOR'S REPORT Board of Trustees Marin-Sonoma Mosquito and Vector Control District Cotati, California
Report on Financial Statements We have audited the accompanying financial statements of the governmental activities and each major fund of the Marin-Sonoma Mosquito and Vector Control District, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the Table of Contents. The prior year financial statements were audited by other auditors whose report dated November 19, 2012 was unqualified.
Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility Our responsibility is to express an op1mon on these financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial positions of governmental activities and each major fund of the Marin/Sonoma Mosquito and Vector Control District as of June 30, 2013, and the respective changes in the financial position and budgetary comparisons listed as part of the basic financial statements, thereof for the years then ended, in conformity with accounting principles generally accepted in the United States of America. T
Accountancy Corporation
F
925.930 .0902 925.930 .0135 [email protected]
3478 Buskirk Avenue, Suite 215
E
Pleasant Hill, CA 94523
w mazeassociates.com
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Emphasis ofMatters
Management adopted the provisions of Governmental Accounting Standards Board Statement 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, which became effective during the year ended June 30, 2013 and required changes of statement titles and certain nomenclature on the financial statements. See Note 2H to the financial statements for relevant disclosures. The emphasis of this matter does not constitute a modification to our opinion. Other Matters
Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management's Discussion & Analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to this information in accordance with generally accepted auditing standards in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic fmancial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Pleasant Hill, California August 21, 2013
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MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED) FOR THE FISCAL YEAR ENDED JUNE 30, 2013
This discussion reflects the District's present and future programs for the fiscal year beginning July 1, 2012 and ending June 30, 2013 and offers its readers a narrative overview and analysis of the financial activities of the District. FINANCIAL HIGHLIGHTS
•
JULY 1, 2012-JUNE 30, 2013
The District's operating fund cash balance (with the County of Marin) at the beginning of the fiscal year was $5,171,745 and $5,495,896 at the end of the fiscal year.
•
The District's capital improvement fund cash balance (with the County of Marin) at the beginning of the fiscal year was $3,049,131 and $2,960,105 at the end of the fiscal year.
•
The District's emergency mosquito control fund cash balance (with the County of Marin) at the beginning of the fiscal year was $1,151,278 and $1,152,755 at the end of the fiscal year.
•
The District had general revenues and charges for services of $7,849,656 and program expenses of $8,665,503. The District's expenses exceeded its revenues by $815,847.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the District's basic financial statements. The District's basic financial statement is comprised of four (4) components: •
Government-wide Financial Statements
•
Fund Financial Statements
•
Notes to Basic Financial Statements
•
Required Supplementary Information
REPORTING ENTITY
The Marin/Sonoma Mosquito Abatement District was formed in May of 1915 and became a California Special District. The District is empowered under the California Health and Safety Code to take all necessary steps to abate mosquitoes and other vectors, such as rats and yellowjackets. The District also provides an Education Program within the Marin and Sonoma County school systems. The District has a twenty four (24) member appointed Board of Trustees that represent both counties and each City or Town. As of June 30, 2013, there were two vacant seats, Sausalito and Cloverdale. The District has a payroll of 37 employees that covers 2300 sq. miles. GOVERNMENT-WIDE FINANCIAL STATEMENTS
The Statement of Net Position and the Statement of Activities include all of the financial activities of the District, including long-term items such as capital assets.
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The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the District's activities. Direct expenses are those that are specifically associated with a program or function and therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by recipients of goods or services offered by the programs and (b) funds and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.
FY 2011/12
FY 2012/13
%CHANGE
PROGRAM REVENUE: Taxes and Assessments
$
Use of Money and Property Other Revenues (Prop 1A recv. Incl.)
6,989,944
$ 7,302,765
4.48%
32,144
-3.61%
185,992
30,985 627,754
237.52%
$ 7,961,504
10.45%
$ 8,665,503
5.43%
TOTAL GENERAL REVENUE
$
7,208,080
EXPENSES
$
8,219,315
The District has experienced an increase in assessments and property tax revenue of 4.48%. Also, use of money and property (investment income) fell by 3.61%. Other Revenues include reimbursement for work performed by the District throughout the year, insurance refunds/reimbursements and Prop lA money reimbursed to the District. FUND FINANCIAL STATEMENTS
The fund financial statements provide information about the District's funds. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. MAJOR FUNDS
GASB Statement No. 34 defines major funds and requires that the District's major governmental type funds be identified and presented separately in the financial statements. Major funds are defined as funds that either have assets, deferred inflows, liabilities, deferred outflows, revenues, or expenditures equal to or greater than ten percent of their fund-type total and five percent of the grand total of all fund types. The District has elected to show all funds as major funds. The General Fund is the main operating fund of the District. This fund is used to account for financial resources not accounted for in other funds. The Capital Projects Fund is used to account for all capital related purchases.
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NET POSITION
Marin-Sonoma Mosquito and Vector Control District
FY 2011/12 TOTAL ASSETS
$
18,478,370
FY 2012/13 $
%CHANGE
18,841,212
1.96%
TOTAL LIABILITIES
3,107,924
4,286,613
37.93%
NET POSITION: Net lnventment in Capital Assets Restricted for Pension Obligation Un restricted TOTAL NET POSITION
6,725,845 1,411,764 7,232,837
6,548,481 1,323,529 6,682,589
-2.64% -6.25% -7.61%
$ 15,370,446
$ 14,554,599
-5.31%
The District's Net Position decreased in FY 2012/13 by $815,847 due to an increase in liabilities. This is mainly due to the accrual of the other post-employment benefits liability, which was not fully funded for in FY 2012/13. The District has two revenue components: Ad valorem taxes and the Benefit Assessments. Total Liabilities or Long-term Debt increased 37.93% in FY 2012/13. This reflects unpaid employee vacation and compensatory hours. Also calculated in this category are the other postemployment benefits (retiree health care}.
ECONOMIC FACTORS AND NEXT YEARS BUDGETS AND RATES The projected Budget for the 2013-2014 Fiscal Year is $7,814,597 with projected Revenues of $7,808,258 with an excess of expenditures over revenue of $6,339. For fiscal year 2013-2014 the District's benefit assessments were increased as follows: Benefit Assessment (BA} #1 to $11.56 per/parcel, BA #2 (Marin County and Zone A} to $20.88 per/parcel and Zone B to $19.965 per/parcel. The ad valorem tax rate did not increase, however, a% increase was estimated for growth by each county. Sonoma County estimated a .75% growth increase and Marin County estimated a 1.0% growth increase. The following factors were considered in preparing the District's Budget for the fiscal year 2013-2014. •
A modest increase in the Benefit Assessments and slight increases in the ad valorem taxes are forecast to increase overall revenue by approximately two percent over the previous year.
•
Cutbacks and deferrals were made to capital expenditures, although purchases of three vehicles and replacement of a laboratory freezer were planned.
•
Similarly, operating expenditures including travel, advertising, services and supplies were adjusted downward to closely match anticipated revenues. Reserves within individual budget categories for unplanned expenditures were reduced or eliminated and the unexpected expenses budget category was increased to provide funding for unforeseeable equipment failures or other eventualities.
•
Completion of the work necessary to upgrade the District's electronic database system. Expenditures are forecast to be lower as we shift to a support and maintenance mode.
•
Completion of the final year of three year applied research into aerial larviciding for tree-hole mosquitoes.
•
Continued occurrence of West Nile Virus and participation in the State's dead bird program.
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•
Continued high level of tick-borne disease surveillance and public outreach efforts.
•
The final phase of the programmatic environmental impact report to update the District1s CEQA documentation.
•
Training and implementation of required safety programs, such as Heat Illness Prevention Program.
•
Completion of an actuarial study of the District's accrued unfunded actuarial liability for OPEB {Other Post-Employment Benefits). This study is mandated once every three years.
•
Interest earned on monies invested is forecast to remain low and stagnant due to low interest rates.
FUTURE EVENTS THAT WILL FINANCIALLY IMPACT THE DISTRICT
•
Provision of funding to replace aging vehicles and equipment. An opportunity may exist to realize vehicle cost savings by utilizing professional Fleet Management services for purchase and disposal of motor vehicles.
•
Establishment of a prefunding mechanism to address the District's present and future OPEB obligations.
•
PEPRA {Pension Reform Act of 2012) mandates a new tier of benefits and costs for employees (who are not current retirement system members) hired on or after January 1, 2013
•
During the latter portion of the fiscal year 2013/14, the District anticipates entering into negotiations with its employee group for a new Memorandum of Understanding.
CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide a general overview of the District's finances for all those with an interest. Questions concerning the information provided in this report or requests for additional financial information should be addressed to the Marin/Sonoma Mosquito and Vector Control District, 595 Helman Lane, Cotati, CA 94931.
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2013
Governmental Activities ASSETS Current assets: Cash and investments (Note 3) Accounts receivable, net Property taxes receivable Interest receivable Deposits held by VCJPA (Note 8) Inventory (Note 2E) Proposition IA loan receivable (Note 9)
$9,637,015 217,983 266,357 10,200 465,072 221,845 150,730 10,969,202
Total current assets, net Capital assets (Note 4): N ondepreciable: Land Depreciable: Structures and improvements Office equipment Office furniture Field equipment Vehicles Less: Accumulated depreciation
6,665,681 607,447 51,316 245,130 1,995,060 (3,691,153)
Total capital assets, net
6,548,481
675,000
Non-current assets: Net pension asset (Note 6B)
1,323,529
Total non-current assets
1,323,529 $18,841,212
Total assets LIABILITIES Current liabilities: Accounts Payable Compensated absences (Note 2F)
$17,825 161,232
Total current liabilities
179,057
Non-current liabilities Compensated absences (Note 2F) Net OPEB obligation (Note 7)
200,340 3,907,216
Total non-current liabilities
4,107,556
Total liabilities
4,286,613
NET POSITION (Note 5) 6,548,481 1,323,529 6,682,589
Net investment in capital assets Restricted for pension obligation Unrestricted
$14,554,599
Total net position See accompanying notes to financial statements
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013
Functions/Programs Governmental Activities: Public Health Total Governmental Activities
Expenses
Program Revenues Charges for Services
Net (Expense) Revenue and Change in Net Assets
($8,665,503)
$181,664
($8,483,839)
($8,665,503)
$181,664
(8,483,839)
General revenues: Taxes and assessments Use of money and property Other revenues
7,302,765 30,985 334,242
Total general revenues
7,667,992
Change in Net Position
(815,847)
Net Position - Beginning
15,370,446
Net Position - Ending
$14,554,599 See accompanying notes to financial statements
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2013
General Fund
Capital Projects Fund
Totals
ASSETS Cash and investments (Note 3) Accounts receivable Property taxes receivable Interest receivable Deposits with VCJPA (Note 8) Inventory (Note 2E) Proposition IA loan receivable (Note 9) Total Assets
$6,676,910 217,983 266,357 10,200 465,072 221,845 150,730
$2,960,105
$9,637,015 217,983 266,357 10,200 465,072 221,845 150,730
$8,009,097
$2,960,105
$10,969,202
LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deferred revenue
$17,825 168,864
$17,825 168,864
Total Liabilities
186,689
186,689
465,072 221,845 3,200,000
465,072 221,845 3,200,000 2,960,105 3,935,491
Fund balances (Note 5) Nonspendable: deposits Nonspendable: inventory Committed for dry period funding Assigned for future capital improvements Unassigned
$2,960,105 3,935,491
Total Fund Balances Total Liabilities and Fund Balances
7,822,408
2,960,105
10,782,513
$8,009,097
$2,960,105
$10,969,202
See accompanying notes to financial statements
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT Reconciliation of the GOVERNMENTAL FUNDS -- BALANCE SHEET with the STATEMENT OF NET POSITION JUNE 30, 2013
FUND BALANCE OF GOVERNMENTAL FUNDS
$10,782,513
Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds Balance Sheet because of the following: Capital assets used in Governmental Activities are not current resources, and therefore, are not reported in the Governmental Fund Balance Sheet. Capital assets at historical cost $10,239,634 Less: accumulated depreciation (3,691, 153)
6,548,481
The net pension asset pertaining to governmental fund types is not a current financial resource, and therefore, is not recorded in the governmental fund statements.
1,323,529
The liabilities below are not due and payable in the current period, and therefore, are not reported in the Governmental Fund Balance Sheet. Deferred revenue Compensated absences payable Other postemployment benefits payable NET ASSETS OF GOVERNMENTAL ACTIVITIES
168,864 (361,572) (3,907,216)
(4,099,924) $14,554,599
See accompanying notes to financial statements
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MARIN-SONOMA MOSQUITO AND VECTORCONTROL DISTRICT GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2013
General Fund
Capital Projects Fund
Totals
REVENUES: Taxes and assessments Use of money and property Other revenues Total Revenues
$7,302,765 27,190 627,754
$3,795
$7,302,765 30,985 627,754
7,957,709
3,795
7,961,504
139,182
5,039,768 2,027,677 139,182
EXPENDITURES: Current: Salaries and benefits General and administrative Capital outlay
5,039,768 2,027,677
7,067,445
Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES
890,264
139,182
7,206,627
{135,3872
754,877
186,268
186,268 086,2682
OTHER FINANCING SOURCES (USES) Transfers in Transfers (out)
086,2682
Total other financing sources (uses) NET CHANGE IN FUND BALANCES BEGINNING FUND BALANCES ENDING FUND BALANCES
{186,2682
186,268
703,996
50,881
7,118,412
2,909,224
$7,822,408
$2,960,105
See accompanying notes to financial statements
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754,877 10,027,636 $10,782,513
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT Reconciliation of the NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS with the STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Position of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis.
$754,877
NET CHANGE IN FUND BALANCES Amounts reported for governmental activities in the Statement of Activities are different because of the following: Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. Capital outlay expenditures are added back to fund balance Net retirements of capital assets are not reported in the governmental fund Depreciation expense is not reportable in the governmental fund
$139,182 (3,864) (312,682)
The prepaid expense pertaining to governmental fund types is not a current financial resources, and therefore is not recorded in the governmental fund statements. This amount represents the amount of the changes in the prepaid asset during the fiscal year. Other postemployment benefits payable is not a current liability, and therefore, is not recorded in the governmental fund statements. This amount represents the amount of the change in the payable in the current period.
(177,364)
(88,235)
(1,154,169)
The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources, and therefore, are not reported as revenue or expenditures in governmental fund statements. The net changes are as follows:
(111,848) (39,108)
Deferred revenue Compensated absences CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES See accompanying notes to financial statements
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($815,847)
MARJN-SONOMA MOSQU1TO AND VECTOR CONTROL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGETANDACTUAL-GENERALFUND FOR THE YEAR ENDED JUNE 30, 2013
Budget Amounts Original Final
Actual
Variance with Final Budget Positive (Negative)
REVENUES Taxes and assessments: Assessments Current secured Current unsecured Prior unsecured Homeowners' property tax relief Annexation revenue Supplemental assessments Other aid
$2,870,754 3,657,053 88,742 1,582 30,679 711,676 (56,585)
$2,870,754 3,657,053 88,742 1,582 30,679 711,676 (56,585)
$2,936,806 3,489,681 101,538 2,622 29,256 675,097 62,015 5,750
$66,052 (167,372) 12,796 1,040 (1,423) (36,579) 118,600 5,750
7,303,901
7,303,901
7,302,765
(1,136)
77,276
77,276
27,190
(50,086)
Other revenues: Contract work Refunds and reimbursements
200,000
200,000
181,664 446,090
(18,336) 446,090
Total other revenues
200,000
200,000
627,754
427,754
7,581,177
7,581,177
7,957,709
376,532
3,289,347 1,820,631
3,285,359 1,824,620
3,230,716 1,8092052
54,643 15,568
Total employees' compensation
5,109,978
5,109,979
5,039,768
70,211
Total expenditures forward
5,109,978
5,109,979
5,0392768
70,211
Total taxes and assessments Use of money and property: Interest income
Total Revenues EXPENDITURES Current: Employees' compensation Salaries and compensated absences Employee benefits
(Continued)
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2013
Budget Amounts Original Final
Actual
Variance with Final Budget Positive (Negative)
EXPENDITURES Current: Total forward
$5,109,978
$5,109,979
$5,039,768
540,350 18,500 16,950 18,000 5,000 69,900 10,800 49,700 4,875 239,708 9,750 211,134 10,000 86,750 13,500 67,600 18,325 21,000 30,635 35,750 517,400 204,000 12,740 5,000 22,500 77,000 42,500 56,200 111,000 48,300
540,350 18,500 16,950 18,000 5,000 69,900 10,800 49,700 4,875 239,708 9,750 211,134 10,000 86,750 13,500 67,600 18,325 21,000 30,635 35,750 517,400 204,000 12,740 5,000 22,500 77,000 42,500 56,200 111,000 48,300
397,387 18,843 10,693 13,746 2,125 58,396 6,005 39,521 2,026 223,821 7,875 213,272 56,460 11,265 32,871 5,740 14,643 29,455 15,767 381,862 197,481 8,146 3,869 13,287 68,568 19,269 30,350 116,584 28,350
Total general and administrative
2,574,867
2,574,867
2,027,677
547,190
Total expenditures
7,684,845
7,684,846
7,067,445
617,401
$70,211
General and administrative: Agriculture Pest abatement supplies Spray/field equipment Source reduction equipment Furniture, appliances and equipment Clothing and personal supplies Safety equipment Communications Food District special expense Household expense Insurance Projects Maintenance - equipment Maintenance - ground/structures Medical - lab Fish supplies Disease surveillance Memberships Office expense Professional and special services Publications and legal notices Rents and leases Small tools and instruments Minor construction/improvements Education/public relations and printing Education and training for employees Travel and transportation Fuel and oil Utilities
142,963 (343) 6,257 4,254 2,875 11,504 4,795 10,179 2,849 15,887 1,875 (2,138) 10,000 30,290 2,235 34,729 12,585 6,357 1,180 19,983 135,538 6,519 4,594 1,131 9,213 8,432 23,231 25,850 (5,584) 19,950
(Continued)
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2013
Budget Amounts Original Final
Actual
Variance with Final Budget Positive (Negative)
OTHER FINANCING SOURCES (USES) Transfers (out) Total other financing sources (uses) NET CHANGE IN FUND BALANCES
{$103,668}
{$103,669}
BEGINNING FUND BALANCE
($186,268)
($186,268)
{186,268}
{186,268}
703,996
$807,665
7,1182412
ENDING FUND BALANCE
$7,822,408 See accompanying notes to financial statements
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MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 1 - GENERAL I Formed in 1915, the Marin-Sonoma Mosquito and Vector Control District (District) is a California Special District empowered to take all necessary steps for the abatement of mosquito and other vectors such as yellow jackets and rats. The District is also empowered to abate as nuisances all standing water that produces mosquitoes. A twenty-four (24) member appointed Board of Trustees governs the District. As of June 30, 2013, there were two vacant seats.
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I The accounting policies of the District conform with accounting principles generally accepted in the United States of America and are applicable to governments. The following is a summary of the significant policies.
A.
Basis ofPresentation The District's basic financial statements are prepared in conformity with United States generally accepted accounting principles. The Government Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America. These Statements require that the following financial statements be presented:
District-wide Financial Statements: The District's financial statements reflect only its own activities; it has no component units (other government units overseen by the District). The Statement of Net Position and Statement of Activities include the financial activities of the overall District government. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Governmental Fund Financial Statements: The fund financial statements provide information about the District's funds. Separate statements for each governmental fund are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. The District reported the following major governmental funds in the accompanying financial statements: General Fund - The General Fund is the main operating fund of the District. All financial resources, except those required to be accounted for in another fund, are accounted for in the General Fund. Capital Projects Fund - The Capital Projects Fund is used to account for all capital purchases.
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MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B.
Basis ofAccounting The District-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when "measurable and available." The District considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Those revenues susceptible to accrual are property taxes, certain charges for services and interest revenue. Non-exchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The District may fund programs with a combination of cost-reimbursement grants and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The District's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.
C.
Property Taxes
Revenue is recognized in the fiscal year for which the tax and assessment is levied. The Counties of Marin and Sonoma levy, bill and collect property taxes and special assessments for the District; the Counties remit the entire amount levied and handle all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on January I of the preceding fiscal year. Secured property tax is due in two installments, on November I and February I, and becomes a lien on those dates. It becomes delinquent on December 10 and April I 0, respectively. Unsecured property tax is due on July 1 and becomes delinquent on August 31. The term "unsecured" refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the personal property being taxed.
18
MARIN/SONOMA MOSQIDTO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property tax revenue is recognized in the fiscal year for which the tax is levied. Marin and Sonoma Counties distribute property tax (termed "settlements") under the Teeter Plan, which allows the District to receive all property taxes in the year in which they are levied. The Counties retain any collections of interest, penalties and delinquencies under this plan. Sonoma County's Teeter Plan includes current year secured and supplemental ad valorem taxes but does not include any direct charges (benefit assessments) or unsecured taxes. A settlement apportionment for 95% of unsecured property taxes is received in October, with the remainder distributed in June. Secured property taxes are received in three settlements and apportioned as follows: 55% in December, 40% in April and 5% in June.
D.
Budgets and Budgetary Accounting The District follows the procedures established by the State of California for special districts in establishing the budgetary data reflected in the financial statements. During the year, the General Fund was the only fund for which a budget was required.
E.
Inventory Inventories consist primarily of pesticides and are stated at cost (first-in, first-out basis) and are recorded as expenditures at the time the inventory is consumed.
F.
Compensated Absences Accumulated unpaid employee vacation and compensated hours, are recognized as liabilities of the District to the extent they vest. Sick leave has also been included as employees receive 50% of their accumulated sick leave upon termination of employment. The liability is recorded in the Statement of Net Position. The General Fund has been used to liquidate compensated absences. At June 30, 2013, the balance of compensated absences was $361,572, of which $161,232 was estimated to be the current portion.
G.
Use of Estimates The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and, as such, include amounts based on informed estimates and judgments of management with consideration given to materiality. Actual results could differ from those amounts.
19
MARIN/SONOMA MOSQIDTO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H.
New Accounting Pronouncements The District has implemented the requirements of the following GASB Pronouncement: GASB Statement No. 63 - In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. In addition to assets, the statement of financial position or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period( s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. This Statement required certain financial statement titles and classification of fund equity to be changed in the financial statements for fiscal year ending June 30, 2013.
INOTE 3 - CASH AND INVESTMENTS I A.
Policies and Classification California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the District's cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the District's name and places the District ahead of general creditors of the institution. The District's investments are carried at fair value, as required by generally accepted accounting principles. The ·nistrict adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. The District's cash and investments consist of the following at June 30, 2013: Cashon hand Deposits with fmancial institutions County of Marin Treasury
$350 33,181 9,603,484
Total cash and investments
$9,637,015
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MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 3 - CASH AND INVESTMENTS (Continued) The District has authorized staff to deposit cash with the Marin County Treasurer in a series of pooled accounts with cash from various other governmental entities within the County, for investment purposes. The County's investment policies are governed by State statutes. In addition, the County has an investment committee, which prescribes written investment policies regarding the types of investments that may be made. The policies limit amounts that may be invested in any one financial institution or amounts, which may be invested in long-term instruments. Interest earned from such time deposits and investments is allocated quarterly to the District based on its average daily cash balances. The fair value of the account at June 3 0, 2013 was provided by the County Treasurer. !NOTE 4-CAPITALASSETS
I
Purchased capital assets are stated at historical cost or estimated historical cost when original cost is not available. Donated capital assets are recorded at their estimated fair value at the date of donation. The District's policy is to capitalize all capital assets with costs exceeding a minimum threshold of $500. Depreciation is recorded using the straight-line method over the estimated useful lives of capital assets which range from 20 to 50 years for structures and improvements, 3 to 40 years for office equipment, 3 to 20 years for office furniture, 10 to 20 years for field equipment, and 5 to 15 years for vehicles. Capital asset activity for the fiscal year ended June 30, 2013, was as follows: Balance June 30, 2012 Capital assets not being depreciated: Land Total capital assets not being depreciated Capital assets being depreciated: Structures and improvements Office equipment Office furniture Field equipment Vehicles Total capital assets being depreciated Accumulated depreciation: Structures and improvements Office equipment Office furniture Field equipment Vehicles Total accumulated depreciation Total capital assets, being depreciated, net Capital assets, net
Additions
Retirements
Balance June 30, 2013
$675,000
$675,000
675,000
675,000
6,665,681 635,627 61,910 239,604 2,029,254
5,526 125,333
(159,527)
6,665,681 607,447 51,316 245,130 1,995,060
9,632,076
139,183
(206,625)
9,564,634
(1,447,726) (316,803) (56,260) (172,434) (1,588,008)
(153,497) (49,690) (2,417) (13,915) (93,163)
159,527
(1,601,223) (329,989) (51,948) (186,349) (1,521,644)
(3,581,231)
(312,682)
202,760
(3,691,153)
6,050,845
($173,499)
($3,865)
5,873,481
$6,725,845
21
$8,324
($36,504) (10,594)
36,504 6,729
$6,548,481
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 5 -
NET POSITION AND FUND BALANCES
Net Position is measured on the full accrual basis while Fund Balances are measured on the modified accrual basis.
A.
Net Position Net Position is the excess of all the District's assets and deferred outflows over all its liabilities and deferred inflows, regardless of fund. Net Position is divided into three captions which is determined at the District-wide level, and is described below:
Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the District's capital assets. Restricted describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the District cannot unilaterally alter. The District's Restricted Net Position is for pension obligations with MCERA. Unrestricted describes the portion of Net Assets which is not restricted to use.
B.
Fund Balance The District's fund balances are classified in accordance with Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the District to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding , sources, the District prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint:
Nonspendables represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact and assets not expected to be converted to cash, such as prepaids, notes receivable, and inventories are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, granters, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by formal action of the Board of Trustees which may be altered only by formal action of the Board of Trustees. Encumbrances and nonspendable amounts subject to Board commitments are included along with spendable resources.
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MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 5 -
FUND BALANCES AND NET ASSETS (Continued)
Assigned fund balances are amounts constrained by the District's intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the Board of Trustees or its designee and may be changed at the discretion of the Board of Trustees or its designee. This category includes encumbrances when it is the District's intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of the Capital Projects Fund which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual General Fund balance and residual fund deficits, if any, of other governmental funds. Within Unassigned fund balance, the Board has earmarked $1, 152, 755 for mosquito and vector emergencies.
I NOTE 6 - PENSION PLAN A.
General Plan The District contributes to the Marin County Employees' Retirement Association (MCERA). The MCERA provides retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members and their beneficiaries. MCERA is a cost sharing multipleemployer plan administered by the County of Marin. Employees vest after 10 years of service and may receive retirement benefits at the age of 50. These benefit provisions and all requirements are by the County Employees' Retirement Law of 1937, as amended and set forth in Section 34150 et. seq. of the government code.
B.
Funding Policy As of the June 30, 2012 actuarial date (the most current available), there is an accrued liability of $9,636,158 which is associated with the District's pension plan, for future benefits, and the district has $3,513,253 in a trust account with MCERA that would be used to offset this liability. MCERA determines contribution requirements using the Entry Age Normal Method. Normal benefit cost under this method is the level amount the District must pay annually to fund an employee's projected retirement benefit. This level percentage of payroll method is used to amortize any unfunded actuarial liabilities (UAAL). The difference between the accrued liability and the deposit in the trust account is being amortized over 17 years and will be funded by the District's annual required contribution, plus any additional optional contributions made by the District. MCERA uses the cost method of valuing the Plan's assets. An investment rate of return of 7.50% is assumed, including inflation at 3.25%. Annual salary is 3.25%, plus service-based rates. Cost of living adjustments are assumed at 1.9%, 2.7%, and 3.0% per year for substantially all District employees.
23
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 6 - PENSION PLAN (Continued) C
Contributions The MCERA members are required to contribute 6.74% to 11.66% of their annual covered salary, depending on their age at the time of hire. The District is required to contribute at an actuarially determined rate; the current rate is 29 .31 % of annual covered payroll. Out of the 29.31 %, 13.24% is the normal required contribution, while the remaining 16.07% is for the unfunded liability. The contribution requirements of plan members and the District are reviewed on an annual basis. The District's contributions to MCERA for the last three years ended June 30 were as follows:
June 30 2011 2012 2013
Annual Pension Cost (APC) $781,223 820,548 891,511
Actual Contribution $1,281,223 1,320,548 891,511
Percentage ofAPC Contributed 164.0% 160.9% 100.0%
Employer's Contribution Rate 6.24% - 11.29% 6.24% - 11.50% 6.74% - 11.66%
The Marin County Employee's Retirement Association (MCERA) Financial Statements can be obtained at One Mcinnis Parkway, Suite 100, San Rafael, California 94903.
INOTE 7 - OTHER POST EMPLOYMENT BENEFITS I The provisions of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, establishes uniform financial reporting standards for employers providing postemployment benefits other than pensions (OPEB). Required disclosures are presented below.
A.
Plan Description and Funding Policy The District provides post-employment medical benefits to retirees and retirees' spouses (for employees hired prior to July 1, 2009) as long as the retiree had 10 years of service vested with the District. Employees hired on or after July 1, 2009 will receive benefits for themselves only. Participants are required to have continuity of medical coverage upon retirement in order to receive these medical benefits. As of June 30, 2013, 20 retirees and/or retiree spouses were receiving benefits. The District's policy is to contribute an amount sufficient to pay the current year's premium. For fiscal year 2012-2013, the District contributed $149,437, which covered premiums, but did not include any additional prefunding benefits.
24
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 7 B.
OTHER POSTEMPLOYMENT BENEFITS (Continued)
Actuarial Assumptions The annual required contribution (ARC) was determined as part of a July 1, 2010 actuarial valuation using the projected unit credit actuarial entry age normal cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included (a) 4.5% investment rate of return (based on a pay-as-you-go funding plan), (b) 3.25% projected annual salary increase, and (c) health care cost trend rates from 5% to 10% of medical benefits. The actuarial methods and assumptions used include techniques that smooth the effects of shortterm volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least tri-annually as results are compared to past expectations and new estimates are made about the future. The District's OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a 30 year amortization period.
C.
Funding Progress and Funded Status Generally accepted accounting principles permits contributions to be treated as OPEB assets and deducted from the Actuarial Accrued Liability when such contributions are placed in an irrevocable trust or equivalent arrangement. As of July 1, 2010, the most recent actuarial valuation date, the plan was zero percent funded. During the fiscal year ended June 30, 2013, the District contributed $149,437 to the Plan. As a result the District has recorded a Net OPEB Obligation, representing the difference between the ARC and the actual contributions, as presented below. The District's Net OPEB Obligation (NOO) is recorded in the Statement of Net Position and is calculated as follows: Annual required contribution (ARC) Interest on Net OPEB Obligation Adjustments to ARC
$1,303,765 119,436 (119,595)
Annual OPEB cost Contributions made - current year premiums
1,303,606 (149,437)
Increase in net OPEB Obligation
1,154,169
Net OPEB Obligation at June 30, 2012
2,753,047
Net OPEB Obligation at June 30, 2013
$3,907,216
25
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 7 -
OTHER POSTE:MPLOYMENT BENEFITS (Continued)
The Plan's annual required contributions and actual contributions for the last three fiscal years are set forth below:
Fiscal Year June 30, 2011 June 30, 2012 June 30, 2013
AnnualOPEB Cost (AOC) $1,140,562 1,221,128 1,303,606
Actual Contribution $152,099 158,057 149,437
Percentage of AOC Contributed 13% 13% 11%
NetOPEB Obligation (Asset) $1,689,976 2,753,047 3,907,216
The Schedule of Funding Progress presents trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Trend data from the July 1, 2010 actuarial study is presented below:
D.
Actuarial Valuation Date
Entry Age Actuarial Accrued Liability (Al
7/1/2010
$12,030,407
Actuarial Value of Assets (Bl $0
Unfunded Actuarial Accrued Liability (A-B1 $12,030,407
Funded Ratio (AIBl 0.00%
Covered Payroll
(Cl $2,684,455
Unfunded Actuarial Liability as Percentage of Covered Payroll [(A-B1fC] 448.2%
Deferred Compensation Plan The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is available for full-time employees. The Internal Revenue Services regulations allow an employer to designate a 457(b) Deferred Compensation Plan as an alternative to social security. The plan permits employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. However, participants are allowed to borrow against their account value, up to 50%. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights (until paid or made available to the employee or other beneficiary) are held in trust by third party administrators for the exclusive benefit of the plan participants and their beneficiaries as prescribed by Internal Revenue Code Section 457 (g). Accordingly, these assets have been excluded from the accompanying financial statements.
26
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE8-RISKMANAGEMENT The District participates with other public entities in a joint venture under a joint powers agreement which established the Vector Control Joint Powers Agency (VCJPA) which is a workers' compensation and general liability risk pool. The relationship between the District and VCJPA is such that VCJPA is not a component unit of the District for financial reporting purposes. The District reports all of its risk management activities in its VCJPA Fund. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Should there be a need for a retrospective adjustment due to adverse claim activity, the District may be assessed additional premiums. The VCJPA is a consortium of thirty-four (34) mosquito abatement or vector control districts in the State of California. It was established under the provisions of California Government Code section 6500 et seq. The VCJPA is governed by a Board of Directors, which meets four times per year, consisting of one member from each of the four regions as well as two trustees of the Mosquito and Vector Control Association of California (MVCAC). A risk management group employed by the VCJPA handles the day-to-day business. The following is a summary of the insurance policies in force carried by the Authority as of June 30, 2013: District District Limits Type of Coverage Deductibles $14,000,000 2,000,000 Statutory 100,000,000 1,000,000,000 35,000 150,000 1,000,000
General Liability Employment Practices Workers' Compensation Boiler and Machinery All-risk Property Auto Physical Damage (per vehicle) Business Travel Accident Group Fidelity
$50,000 25,000 50,000 2,500 10,000 500 none 15,000
As defined by Government Accounting Standards Board (GASB) Statement 10, the Vector Control Joint Powers Agency is "a claims servicing or account pool." VCJPA manages separate accounts for each pool member from whom losses and expenses of that member are paid, up to the retention limit. VCJPA purchases commercial excess insurance. The annual assessment of each member includes allocation for loss payments, expenses and excess insurance premiums. Annually, VCJPA evaluates the assets of each pool member in comparison with expected future liabilities. The "financial risk position" of each member is determined by subtracting case reserves, claims incurred but not reported amounts and claim development from members' deposit balances. If a negative risk position is found, a supplemental amount is added to the member's annual assessment. In accordance with GASB 10, the District has recorded its deposit with VCJPA as an asset at June 30, 2013. The District had no claims losses outstanding at June 30, 2013. Settled claims for the District have not exceeded coverage in any of the past three years.
The District has reserves of $465,072 on deposit with VCJPA for member contingencies to cover the District's self-insured retentions (SIR) for two claims in each type of coverage. The VCJPA has also purchased insurance to cover catastrophic losses.
27
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 8 -
RISK MANAGEMENT (Continued)
Financial statements may be obtained from Vector Control Joint Powers Agency, I 831 K Street, Sacramento, California 958I4.
I NOTE 9-ACCOUNTING FOR PROPOSITION lA STATE BORROWING Proposition IA was passed by California voters in 2004 to ensure local property tax and sales tax revenues remain with local government thereby safeguarding funding for public safety, health, libraries, parks, and other local services. Provisions can only be suspended if the Governor declares a fiscal necessity and two-thirds of the Legislature concurs. Under the provisions of Proposition IA and as part of the fiscal year 2009-I 0 budget package passed by the California State legislature on July 28, 2009, the State of California borrowed 8% of property tax revenue, including those property taxes associated with the in-lieu motor vehicle license fees, triple flip in lieu sales taxes, and supplemental property taxes, apportioned to the District. The State was required to repay the $280,7I2 it borrowed from the District, plus interest of 2%, by June 30, 2013. As of June 30, 2013, the District received $129,982; the remaining $I50,730 was received subsequent to year-end.
28
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROL AND
REQUIRED COMMUNICATIONS FOR THE YEAR ENDED JUNE 30, 2013
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MARIN/SONOMA MOSQIDTO AND VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROL AND
REQUIRED COMMUNICATIONS For the Year Ended June 30, 2013 Table of Contents
Memorandum on Internal Control .................................................................................................... I Schedule of 0th.er Matters ........................................................................................................ 3
Required Communications ................................................................................................................. 7 Significant Audit Findings ............................................................................................................ 7 Accounting Policies ................................................................................................................. 7 Unusual Transactions, Controversial or Emerging Areas ..................................................... 8 Estimates ................................................................................................................................... 8 Disclosures ................................................................................................................................ 9 Difficulties Encountered in Performing the Audit ................................................................. 9 Corrected and Uncorrected Misstatements ............................................................................. 9 Disagreements with Management ........................................................................................... 9 Management Representations .................................................................................................. 9 Management Consultations with Other Independent Accountants ....................................... 9 Other Audit Findings or Issues ................................................................................................ 9
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MAZE
&ASSOCIATES
MEMORANDUM ON INTERNAL CONTROL
To the Board of Trustees Marin/Sonoma Mosquito and Vector Control District Cotati, California We have audited the basic financial statements of the Marin/Sonoma Mosquito and Vector Control District (District) for the year ended June 30, 2013, and have issued our report thereon dated August 21, 2013. In planning and performing our audit of the financial statements of the Marin/Sonoma Mosquito and Vector Control District as of and for the year ended June 30, 2013, in accordance with auditing standards generally accepted in the United States of America, we considered the District's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all such deficiencies have been identified. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. We did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exit that have not been identified. Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe to be of potential benefit to the District. The District's written responses included in this report have not been subjected to the audit procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. This communication is intended solely for the information and use of management, Board of Trustees, others within the organization, and is not intended to be and should not be used by anyone other than these specified parties.
Pleasant Hill, California August 21, 2013
T
Accountancy Corporation
F
925.930.0902 925.930.0135 [email protected]
34 78 Buskirk Avenue, Suite 215
E
Pleasant Hill , CA 94523
w mazeassociates.com
1
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MARIN/SONOMA MOSQUITO & VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROLS SCHEDULE OF OTHER MATTERS
2013-01:
Physical Inventory Counts of Vehicles and Pesticides
As part of the audit, we observed the physical inventory count performed by District staff over vehicles and pesticides. We selected a sample of vehicles and pesticide items to test to confirm if our counts matched the inventory detail maintained by staff. In doing so, we found that out of eleven items tested, four items did not match the detail. In response to this, we selected an additional sample and found no more deviations. We understand the employee who normally assists in the inventory count was out on a job site, therefore another employee was asked to assist. During this same timeframe, the Shop/Facilities Coordinator in charge of the count was also supervising another job and therefore was not able to double check that the items counted by the Vector Control Technician were done correctly. Inventory counts should be conducted accurately to ensure that inventory is properly reported on the financial statements. The potential impact is that the inventory balance on the financial statements may be under- or over-stated. We recommend that when the inventory count is conducted at year-end that there should be a second count to ensure that the amounts being reported are accurate. Management's Response: Management agrees with this recommendation and has instituted new procedures for conducting the annual pesticide inventory.
2013-02:
Purchasing Policy
During our testing of disbursements we noted that the District does not have a formal comprehensive purchasing policy. While disbursements are currently reviewed and authorized by the Finance/Benefit Manager and all checks are signed by the District Manager and a Trustee, it would be prudent for the District to have a formal comprehensive purchasing policy in place outlining approval limits, authorized and unauthorized purchases and formalizing the requirements for two signatures. Management's Response: Management agrees with this recommendation and plans to develop a comprehensive purchasing policy during FY 2013/14.
3
MARIN/SONOMA MOSQUITO & VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROLS SCHEDULE OF OTHER MATTERS
2013-03:
Cross-Training for Payroll
During our review of the District's procedures over payroll, we noted that only the Finance/Benefit Manager has the ability to process payroll. It would be prudent for the District to designate a backup person who would be trained to process payroll, so that if the Finance/Benefit Manager was absent during a payroll processing period, there is a second party that could perform the payroll function. Management's Response:
Management agrees with this recommendation in principle and will investigate the feasibility of implementing this recommendation.
2013-04:
Other Post Employment Benefits
As of June 30, 2013, the District has a Net OPEB obligation (liability) of $3.9 million. This is due to the District not funding its annual required contributions. Subsequent to the completion of the audit, the District received its updated actuarial valuation over its Retiree Healthcare Plan, dated July 1, 2013. In reviewing the results of the updated actuarial valuation, we noted that the District's Actuarial Accrued Liability increased 25%, from $12 million to $15 million. If the District continues to operate on a payas-you-go basis, where only the current year retiree premiums are paid and no amounts are contributed to an irrevocable trust, the Net OPEB obligation will continue to grow and may become unsustainable. Management, in conjunction with the Board, should look closely at the funding strategy of the Retiree Health Plan and consider establishing an irrevocable trust and funding more than the current annual premiums.
Management's Response:
As part of the District's recent OPEB valuation report and actuarial study performed by Bartel and Associates, a memorandum was prepared that outlined various options to begin prefunding the District's OPEB obligations. District staff are currently in the process of investigating various plan options for an irrevocable trust and will submit a report and recommendations to the Board during FY 2013/14.
4
MARIN/SONOMA MOSQUITO & VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROLS SCHEDULE OF OTHER MATTERS 2013-05:
Upcoming Governmental Accounting Standards Board Pronouncements
The following comment represents new pronouncements taking affect in the next few years. We have cited them here to keep you abreast of developments: GASB 68 - Accounting and Financial Reporting for Pensions (an amendment of GASB 27) This Statement will have material impact on the District's financial statements. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service.
In financial statements prepared using the economic resources measurement focus and accrual basis of accounting, a single or agent employer that does not have a special funding situation is required to recognize a liability equal to the net pension liability. The net pension liability is required to be measured as of a date no earlier than the end of the employer's prior fiscal year (the measurement date), consistently applied from period to period. Note disclosure and required supplementary information requirements about pensions also are addressed. Distinctions are made regarding the particular requirements for employers based on the number of employers whose employees are provided with pensions through the pension plan and whether pension obligations and pension plan assets are shared. The following are the major impacts: •
This Statement requires the liability of employers and nonemployer contributing entities employees for defined benefit pensions (net pension liability) to be measured as the portion the present value of projected benefit payments to be provided through the pension plan current active and inactive employees that is attributed to those employees' past periods service (total pension liability), less the amount of the pension plan's fiduciary net position.
•
Actuarial valuations of the total pension liability are required to be performed at least every two years, with more frequent valuations encouraged. If a valuat~on is not performed as of the measurement date, the total pension liability is required to be based on update procedures to roll forward amounts from an earlier actuarial valuation (performed as of a date no more than 3 0 months and 1 day prior to the employer's most recent year-end).
•
The actuarial present value of projected benefit payments is required to be attributed to periods of employee service using the entry age actuarial cost method with each period's service cost determined as a level percentage of pay. The actuarial present value is required to be attributed for each employee individually, from the period when the employee first accrues pensions through the period when the employee retires.
5
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MAZE
&ASSOCIATES
REQUIRED COMMUNICATIONS
To the Board of Trustees Marin/Sonoma Mosquito and Vector Control District Cotati, California We have audited the basic financial statements of the Marin/Sonoma Mosquito and Vector Control District for the year ended June 30, 2013. Professional standards require that we communicate to you the following information related to our audit under generally accepted auditing standards. Significant Audit Findings
Accounting Policies Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Marin/Sonoma Mosquito and Vector Control District are described in Note 2 to the financial statements. The following pronouncements became effective but did not have a material effect on the financial statements: GASB 60 - Accounting and Financial Reporting for Service Concession Arrangements The objective of this proposed Statement is to establish accounting and financial reporting requirements for service concession arrangements (SCAs ), which are a type of public-private or public-public partnership arrangement. SCAs include, but are not limited to: a.
Arrangements in which the operator will design and build a facility and will obtain the right to collect fees from third parties (for example, construction of a municipal complex for the right to lease a portion of the facility to third parties)
b. Arrangements in which the operator will provide an up-front payment or a series of payments in exchange for the right to access an existing facility (for example, a parking garage) and collect fees from third parties for its usage c.
Arrangements in which the operator will design and build a facility (for example, a new tollway), finance the construction costs, provide the associated services, collect the associated fees, and convey the facility to the government at the end of the arrangement.
T
Acco untancy Corporation
F
925.930.0902 925.930 .0135 [email protected]
3478 Buskirk Avenue, Suite 215
E
Pleasant Hill , CA 94523
w mazeassociates.com
7
GASB 62 - Codification of Accounting and Financial Reporting Guidance Contained in PreNovember 30, 1989 FASB and A/CPA Pronouncements This Statement also supersedes Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, thereby eliminating the election provided in paragraph 7 of that Statement for enterprise funds and business-type activities to apply post-November 30, 1989 FASB Statements and Interpretations that do not conflict with or contradict GASB pronouncements. However, those entities can continue to apply, as other accounting literature, post-November 30, 1989 FASB pronouncements that do not conflict with or contradict GASB pronouncements, including this Statement.
GASB 63 - Financial Reporting o(Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4. Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. Previous fmancial reporting standards do not include guidance for reporting those fmancial statement elements, which are distinct from assets and liabilities.
Concepts Statement 4 also identifies net position as the residual of all other elements presented in a statement of fmancial position. This Statement amends the net asset reporting requirements in Statement No. 34. Basic Financial Statements-and Management's Discussion and Analvsisfor State and Local Governments, and other pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets~ Unusual Transactions, Controversial or Emerging Areas We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the fmancial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate(s) affecting the District's fmancial statements: Management's estimate of depreciation is based on its established useful lives. We evaluated the key factors and assumptions used to develop the depreciation calculation in determining that it is reasonable in relation to the fmancial statements taken as a whole.
8
Disclosures The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all/certain such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations We have requested certain representations from management that are included in a management representation letter dated August 21, 2013.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
******
9
This information is intended solely for the use of the Audit Committee, Board of Trustees and management and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours,
Pleasant Hill, California August 21, 2013
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MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I INTRODUCTORY SECTION Table of Contents ........................................................................................................................................................ i Board of Trustees ....................................................................................................................................................... ii
I FINANCIAL SECTION I fudependent Auditors' Report .................................................................................................................................... 1 Management's Discussion and Analysis ................................................................................................................... 3 Basic Financial Statements: District-wide statements: Statement of Net Position ...................................................................................................................... 7 Statement of Activities .......................................................................................................................... 8 Fund financial statements: Governmental Funds - Balance Sheet .................................................................................................. 9 Reconciliation of the Governmental Funds Balance Sheet With the Statement ofNet Position ............................................................................................... 10 Governmental Funds - Statement of Revenues, Expenditures and Changes in Fund Balances ........................................................................................................ 11 Reconciliation of the Net Change in Fund Balances - Total Governmental Funds With the Statement of Activities ................................................................................................... 12 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ............................................................................. 13 Notes to Basic Financial Statements ............................................................................................................. 17
MARIN-SONOMA MOSQillTO AND VECTOR CONTROL DISTRICT BOARD OF TRUSTEES JUNE 30, 2013
Term Expires Dec 31 81 Paul Libeu, President ..................................................................................................................................... 2014 Judith Trusendi, Vice President .................................................................................................................... 2013 Yvonne Van Dyke, Secretary ........................................................................................................................ 2014 Lee Braun, Treasurer ..................................................................................................................................... 2013 Steve Ayala ................................................................................................................................................... 2016 Nancy Barnard ............................................................................................................................................... 2014 Charles Bouey ................................................................................................................................................ 2014 Tom Bradner .................................................................................................................................................. 2013 Martin Castro ................................................................................................................................................. 2015 Tamara Davis ................................................................................................................................................. 2014 Frank Egger ................................................................................................................................................... 2015 Margaret Graham .......................................................................................................................................... 2013 William. "Billy" Holland ................................................................................................................................ 2016 Michael Kyes ................................................................................................................................................. 2013 Phil Paisley .................................................................................................................................................... 2013 Bill Pitcher ..................................................................................................................................................... 2015 Sandra Ross ................................................................................................................................................... 2013 Herb Rowland Jr ............................................................................................................................................ 2015 Ed Schulze ..................................................................................................................................................... 2015 Roger Smifu ................................................................................................................................................... 2014 Richard Stabler .............................................................................................................................................. 2013 Jim Wood ....................................................................................................................................................... 2013
ii
MAZE
&ASSOCIATES
INDEPENDENT AUDITOR'S REPORT Board of Trustees Marin-Sonoma Mosquito and Vector Control District Cotati, California
Report on Financial Statements We have audited the accompanying financial statements of the governmental activities and each major fund of the Marin-Sonoma Mosquito and Vector Control District, as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the Table of Contents. The prior year financial statements were audited by other auditors whose report dated November 19, 2012 was unqualified.
Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility Our responsibility is to express an op1mon on these financial statements based on our audit. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial positions of governmental activities and each major fund of the Marin/Sonoma Mosquito and Vector Control District as of June 30, 2013, and the respective changes in the financial position and budgetary comparisons listed as part of the basic financial statements, thereof for the years then ended, in conformity with accounting principles generally accepted in the United States of America. T
Accountancy Corporation
F
925.930 .0902 925.930 .0135 [email protected]
3478 Buskirk Avenue, Suite 215
E
Pleasant Hill, CA 94523
w mazeassociates.com
1
Emphasis ofMatters
Management adopted the provisions of Governmental Accounting Standards Board Statement 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, which became effective during the year ended June 30, 2013 and required changes of statement titles and certain nomenclature on the financial statements. See Note 2H to the financial statements for relevant disclosures. The emphasis of this matter does not constitute a modification to our opinion. Other Matters
Required Supplementary Information Accounting principles generally accepted in the United States of America require that Management's Discussion & Analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to this information in accordance with generally accepted auditing standards in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic fmancial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Pleasant Hill, California August 21, 2013
2
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED) FOR THE FISCAL YEAR ENDED JUNE 30, 2013
This discussion reflects the District's present and future programs for the fiscal year beginning July 1, 2012 and ending June 30, 2013 and offers its readers a narrative overview and analysis of the financial activities of the District. FINANCIAL HIGHLIGHTS
•
JULY 1, 2012-JUNE 30, 2013
The District's operating fund cash balance (with the County of Marin) at the beginning of the fiscal year was $5,171,745 and $5,495,896 at the end of the fiscal year.
•
The District's capital improvement fund cash balance (with the County of Marin) at the beginning of the fiscal year was $3,049,131 and $2,960,105 at the end of the fiscal year.
•
The District's emergency mosquito control fund cash balance (with the County of Marin) at the beginning of the fiscal year was $1,151,278 and $1,152,755 at the end of the fiscal year.
•
The District had general revenues and charges for services of $7,849,656 and program expenses of $8,665,503. The District's expenses exceeded its revenues by $815,847.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the District's basic financial statements. The District's basic financial statement is comprised of four (4) components: •
Government-wide Financial Statements
•
Fund Financial Statements
•
Notes to Basic Financial Statements
•
Required Supplementary Information
REPORTING ENTITY
The Marin/Sonoma Mosquito Abatement District was formed in May of 1915 and became a California Special District. The District is empowered under the California Health and Safety Code to take all necessary steps to abate mosquitoes and other vectors, such as rats and yellowjackets. The District also provides an Education Program within the Marin and Sonoma County school systems. The District has a twenty four (24) member appointed Board of Trustees that represent both counties and each City or Town. As of June 30, 2013, there were two vacant seats, Sausalito and Cloverdale. The District has a payroll of 37 employees that covers 2300 sq. miles. GOVERNMENT-WIDE FINANCIAL STATEMENTS
The Statement of Net Position and the Statement of Activities include all of the financial activities of the District, including long-term items such as capital assets.
3
The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the District's activities. Direct expenses are those that are specifically associated with a program or function and therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by recipients of goods or services offered by the programs and (b) funds and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues.
FY 2011/12
FY 2012/13
%CHANGE
PROGRAM REVENUE: Taxes and Assessments
$
Use of Money and Property Other Revenues (Prop 1A recv. Incl.)
6,989,944
$ 7,302,765
4.48%
32,144
-3.61%
185,992
30,985 627,754
237.52%
$ 7,961,504
10.45%
$ 8,665,503
5.43%
TOTAL GENERAL REVENUE
$
7,208,080
EXPENSES
$
8,219,315
The District has experienced an increase in assessments and property tax revenue of 4.48%. Also, use of money and property (investment income) fell by 3.61%. Other Revenues include reimbursement for work performed by the District throughout the year, insurance refunds/reimbursements and Prop lA money reimbursed to the District. FUND FINANCIAL STATEMENTS
The fund financial statements provide information about the District's funds. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. MAJOR FUNDS
GASB Statement No. 34 defines major funds and requires that the District's major governmental type funds be identified and presented separately in the financial statements. Major funds are defined as funds that either have assets, deferred inflows, liabilities, deferred outflows, revenues, or expenditures equal to or greater than ten percent of their fund-type total and five percent of the grand total of all fund types. The District has elected to show all funds as major funds. The General Fund is the main operating fund of the District. This fund is used to account for financial resources not accounted for in other funds. The Capital Projects Fund is used to account for all capital related purchases.
4
NET POSITION
Marin-Sonoma Mosquito and Vector Control District
FY 2011/12 TOTAL ASSETS
$
18,478,370
FY 2012/13 $
%CHANGE
18,841,212
1.96%
TOTAL LIABILITIES
3,107,924
4,286,613
37.93%
NET POSITION: Net lnventment in Capital Assets Restricted for Pension Obligation Un restricted TOTAL NET POSITION
6,725,845 1,411,764 7,232,837
6,548,481 1,323,529 6,682,589
-2.64% -6.25% -7.61%
$ 15,370,446
$ 14,554,599
-5.31%
The District's Net Position decreased in FY 2012/13 by $815,847 due to an increase in liabilities. This is mainly due to the accrual of the other post-employment benefits liability, which was not fully funded for in FY 2012/13. The District has two revenue components: Ad valorem taxes and the Benefit Assessments. Total Liabilities or Long-term Debt increased 37.93% in FY 2012/13. This reflects unpaid employee vacation and compensatory hours. Also calculated in this category are the other postemployment benefits (retiree health care}.
ECONOMIC FACTORS AND NEXT YEARS BUDGETS AND RATES The projected Budget for the 2013-2014 Fiscal Year is $7,814,597 with projected Revenues of $7,808,258 with an excess of expenditures over revenue of $6,339. For fiscal year 2013-2014 the District's benefit assessments were increased as follows: Benefit Assessment (BA} #1 to $11.56 per/parcel, BA #2 (Marin County and Zone A} to $20.88 per/parcel and Zone B to $19.965 per/parcel. The ad valorem tax rate did not increase, however, a% increase was estimated for growth by each county. Sonoma County estimated a .75% growth increase and Marin County estimated a 1.0% growth increase. The following factors were considered in preparing the District's Budget for the fiscal year 2013-2014. •
A modest increase in the Benefit Assessments and slight increases in the ad valorem taxes are forecast to increase overall revenue by approximately two percent over the previous year.
•
Cutbacks and deferrals were made to capital expenditures, although purchases of three vehicles and replacement of a laboratory freezer were planned.
•
Similarly, operating expenditures including travel, advertising, services and supplies were adjusted downward to closely match anticipated revenues. Reserves within individual budget categories for unplanned expenditures were reduced or eliminated and the unexpected expenses budget category was increased to provide funding for unforeseeable equipment failures or other eventualities.
•
Completion of the work necessary to upgrade the District's electronic database system. Expenditures are forecast to be lower as we shift to a support and maintenance mode.
•
Completion of the final year of three year applied research into aerial larviciding for tree-hole mosquitoes.
•
Continued occurrence of West Nile Virus and participation in the State's dead bird program.
5
•
Continued high level of tick-borne disease surveillance and public outreach efforts.
•
The final phase of the programmatic environmental impact report to update the District1s CEQA documentation.
•
Training and implementation of required safety programs, such as Heat Illness Prevention Program.
•
Completion of an actuarial study of the District's accrued unfunded actuarial liability for OPEB {Other Post-Employment Benefits). This study is mandated once every three years.
•
Interest earned on monies invested is forecast to remain low and stagnant due to low interest rates.
FUTURE EVENTS THAT WILL FINANCIALLY IMPACT THE DISTRICT
•
Provision of funding to replace aging vehicles and equipment. An opportunity may exist to realize vehicle cost savings by utilizing professional Fleet Management services for purchase and disposal of motor vehicles.
•
Establishment of a prefunding mechanism to address the District's present and future OPEB obligations.
•
PEPRA {Pension Reform Act of 2012) mandates a new tier of benefits and costs for employees (who are not current retirement system members) hired on or after January 1, 2013
•
During the latter portion of the fiscal year 2013/14, the District anticipates entering into negotiations with its employee group for a new Memorandum of Understanding.
CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide a general overview of the District's finances for all those with an interest. Questions concerning the information provided in this report or requests for additional financial information should be addressed to the Marin/Sonoma Mosquito and Vector Control District, 595 Helman Lane, Cotati, CA 94931.
6
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF NET POSITION JUNE 30, 2013
Governmental Activities ASSETS Current assets: Cash and investments (Note 3) Accounts receivable, net Property taxes receivable Interest receivable Deposits held by VCJPA (Note 8) Inventory (Note 2E) Proposition IA loan receivable (Note 9)
$9,637,015 217,983 266,357 10,200 465,072 221,845 150,730 10,969,202
Total current assets, net Capital assets (Note 4): N ondepreciable: Land Depreciable: Structures and improvements Office equipment Office furniture Field equipment Vehicles Less: Accumulated depreciation
6,665,681 607,447 51,316 245,130 1,995,060 (3,691,153)
Total capital assets, net
6,548,481
675,000
Non-current assets: Net pension asset (Note 6B)
1,323,529
Total non-current assets
1,323,529 $18,841,212
Total assets LIABILITIES Current liabilities: Accounts Payable Compensated absences (Note 2F)
$17,825 161,232
Total current liabilities
179,057
Non-current liabilities Compensated absences (Note 2F) Net OPEB obligation (Note 7)
200,340 3,907,216
Total non-current liabilities
4,107,556
Total liabilities
4,286,613
NET POSITION (Note 5) 6,548,481 1,323,529 6,682,589
Net investment in capital assets Restricted for pension obligation Unrestricted
$14,554,599
Total net position See accompanying notes to financial statements
7
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013
Functions/Programs Governmental Activities: Public Health Total Governmental Activities
Expenses
Program Revenues Charges for Services
Net (Expense) Revenue and Change in Net Assets
($8,665,503)
$181,664
($8,483,839)
($8,665,503)
$181,664
(8,483,839)
General revenues: Taxes and assessments Use of money and property Other revenues
7,302,765 30,985 334,242
Total general revenues
7,667,992
Change in Net Position
(815,847)
Net Position - Beginning
15,370,446
Net Position - Ending
$14,554,599 See accompanying notes to financial statements
8
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2013
General Fund
Capital Projects Fund
Totals
ASSETS Cash and investments (Note 3) Accounts receivable Property taxes receivable Interest receivable Deposits with VCJPA (Note 8) Inventory (Note 2E) Proposition IA loan receivable (Note 9) Total Assets
$6,676,910 217,983 266,357 10,200 465,072 221,845 150,730
$2,960,105
$9,637,015 217,983 266,357 10,200 465,072 221,845 150,730
$8,009,097
$2,960,105
$10,969,202
LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deferred revenue
$17,825 168,864
$17,825 168,864
Total Liabilities
186,689
186,689
465,072 221,845 3,200,000
465,072 221,845 3,200,000 2,960,105 3,935,491
Fund balances (Note 5) Nonspendable: deposits Nonspendable: inventory Committed for dry period funding Assigned for future capital improvements Unassigned
$2,960,105 3,935,491
Total Fund Balances Total Liabilities and Fund Balances
7,822,408
2,960,105
10,782,513
$8,009,097
$2,960,105
$10,969,202
See accompanying notes to financial statements
9
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT Reconciliation of the GOVERNMENTAL FUNDS -- BALANCE SHEET with the STATEMENT OF NET POSITION JUNE 30, 2013
FUND BALANCE OF GOVERNMENTAL FUNDS
$10,782,513
Amounts reported for Governmental Activities in the Statement of Net Position are different from those reported in the Governmental Funds Balance Sheet because of the following: Capital assets used in Governmental Activities are not current resources, and therefore, are not reported in the Governmental Fund Balance Sheet. Capital assets at historical cost $10,239,634 Less: accumulated depreciation (3,691, 153)
6,548,481
The net pension asset pertaining to governmental fund types is not a current financial resource, and therefore, is not recorded in the governmental fund statements.
1,323,529
The liabilities below are not due and payable in the current period, and therefore, are not reported in the Governmental Fund Balance Sheet. Deferred revenue Compensated absences payable Other postemployment benefits payable NET ASSETS OF GOVERNMENTAL ACTIVITIES
168,864 (361,572) (3,907,216)
(4,099,924) $14,554,599
See accompanying notes to financial statements
10
MARIN-SONOMA MOSQUITO AND VECTORCONTROL DISTRICT GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2013
General Fund
Capital Projects Fund
Totals
REVENUES: Taxes and assessments Use of money and property Other revenues Total Revenues
$7,302,765 27,190 627,754
$3,795
$7,302,765 30,985 627,754
7,957,709
3,795
7,961,504
139,182
5,039,768 2,027,677 139,182
EXPENDITURES: Current: Salaries and benefits General and administrative Capital outlay
5,039,768 2,027,677
7,067,445
Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES
890,264
139,182
7,206,627
{135,3872
754,877
186,268
186,268 086,2682
OTHER FINANCING SOURCES (USES) Transfers in Transfers (out)
086,2682
Total other financing sources (uses) NET CHANGE IN FUND BALANCES BEGINNING FUND BALANCES ENDING FUND BALANCES
{186,2682
186,268
703,996
50,881
7,118,412
2,909,224
$7,822,408
$2,960,105
See accompanying notes to financial statements
11
754,877 10,027,636 $10,782,513
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT Reconciliation of the NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS with the STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Position of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis.
$754,877
NET CHANGE IN FUND BALANCES Amounts reported for governmental activities in the Statement of Activities are different because of the following: Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. Capital outlay expenditures are added back to fund balance Net retirements of capital assets are not reported in the governmental fund Depreciation expense is not reportable in the governmental fund
$139,182 (3,864) (312,682)
The prepaid expense pertaining to governmental fund types is not a current financial resources, and therefore is not recorded in the governmental fund statements. This amount represents the amount of the changes in the prepaid asset during the fiscal year. Other postemployment benefits payable is not a current liability, and therefore, is not recorded in the governmental fund statements. This amount represents the amount of the change in the payable in the current period.
(177,364)
(88,235)
(1,154,169)
The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources, and therefore, are not reported as revenue or expenditures in governmental fund statements. The net changes are as follows:
(111,848) (39,108)
Deferred revenue Compensated absences CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES See accompanying notes to financial statements
12
($815,847)
MARJN-SONOMA MOSQU1TO AND VECTOR CONTROL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGETANDACTUAL-GENERALFUND FOR THE YEAR ENDED JUNE 30, 2013
Budget Amounts Original Final
Actual
Variance with Final Budget Positive (Negative)
REVENUES Taxes and assessments: Assessments Current secured Current unsecured Prior unsecured Homeowners' property tax relief Annexation revenue Supplemental assessments Other aid
$2,870,754 3,657,053 88,742 1,582 30,679 711,676 (56,585)
$2,870,754 3,657,053 88,742 1,582 30,679 711,676 (56,585)
$2,936,806 3,489,681 101,538 2,622 29,256 675,097 62,015 5,750
$66,052 (167,372) 12,796 1,040 (1,423) (36,579) 118,600 5,750
7,303,901
7,303,901
7,302,765
(1,136)
77,276
77,276
27,190
(50,086)
Other revenues: Contract work Refunds and reimbursements
200,000
200,000
181,664 446,090
(18,336) 446,090
Total other revenues
200,000
200,000
627,754
427,754
7,581,177
7,581,177
7,957,709
376,532
3,289,347 1,820,631
3,285,359 1,824,620
3,230,716 1,8092052
54,643 15,568
Total employees' compensation
5,109,978
5,109,979
5,039,768
70,211
Total expenditures forward
5,109,978
5,109,979
5,0392768
70,211
Total taxes and assessments Use of money and property: Interest income
Total Revenues EXPENDITURES Current: Employees' compensation Salaries and compensated absences Employee benefits
(Continued)
13
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2013
Budget Amounts Original Final
Actual
Variance with Final Budget Positive (Negative)
EXPENDITURES Current: Total forward
$5,109,978
$5,109,979
$5,039,768
540,350 18,500 16,950 18,000 5,000 69,900 10,800 49,700 4,875 239,708 9,750 211,134 10,000 86,750 13,500 67,600 18,325 21,000 30,635 35,750 517,400 204,000 12,740 5,000 22,500 77,000 42,500 56,200 111,000 48,300
540,350 18,500 16,950 18,000 5,000 69,900 10,800 49,700 4,875 239,708 9,750 211,134 10,000 86,750 13,500 67,600 18,325 21,000 30,635 35,750 517,400 204,000 12,740 5,000 22,500 77,000 42,500 56,200 111,000 48,300
397,387 18,843 10,693 13,746 2,125 58,396 6,005 39,521 2,026 223,821 7,875 213,272 56,460 11,265 32,871 5,740 14,643 29,455 15,767 381,862 197,481 8,146 3,869 13,287 68,568 19,269 30,350 116,584 28,350
Total general and administrative
2,574,867
2,574,867
2,027,677
547,190
Total expenditures
7,684,845
7,684,846
7,067,445
617,401
$70,211
General and administrative: Agriculture Pest abatement supplies Spray/field equipment Source reduction equipment Furniture, appliances and equipment Clothing and personal supplies Safety equipment Communications Food District special expense Household expense Insurance Projects Maintenance - equipment Maintenance - ground/structures Medical - lab Fish supplies Disease surveillance Memberships Office expense Professional and special services Publications and legal notices Rents and leases Small tools and instruments Minor construction/improvements Education/public relations and printing Education and training for employees Travel and transportation Fuel and oil Utilities
142,963 (343) 6,257 4,254 2,875 11,504 4,795 10,179 2,849 15,887 1,875 (2,138) 10,000 30,290 2,235 34,729 12,585 6,357 1,180 19,983 135,538 6,519 4,594 1,131 9,213 8,432 23,231 25,850 (5,584) 19,950
(Continued)
14
MARIN-SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2013
Budget Amounts Original Final
Actual
Variance with Final Budget Positive (Negative)
OTHER FINANCING SOURCES (USES) Transfers (out) Total other financing sources (uses) NET CHANGE IN FUND BALANCES
{$103,668}
{$103,669}
BEGINNING FUND BALANCE
($186,268)
($186,268)
{186,268}
{186,268}
703,996
$807,665
7,1182412
ENDING FUND BALANCE
$7,822,408 See accompanying notes to financial statements
15
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MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 1 - GENERAL I Formed in 1915, the Marin-Sonoma Mosquito and Vector Control District (District) is a California Special District empowered to take all necessary steps for the abatement of mosquito and other vectors such as yellow jackets and rats. The District is also empowered to abate as nuisances all standing water that produces mosquitoes. A twenty-four (24) member appointed Board of Trustees governs the District. As of June 30, 2013, there were two vacant seats.
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES I The accounting policies of the District conform with accounting principles generally accepted in the United States of America and are applicable to governments. The following is a summary of the significant policies.
A.
Basis ofPresentation The District's basic financial statements are prepared in conformity with United States generally accepted accounting principles. The Government Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America. These Statements require that the following financial statements be presented:
District-wide Financial Statements: The District's financial statements reflect only its own activities; it has no component units (other government units overseen by the District). The Statement of Net Position and Statement of Activities include the financial activities of the overall District government. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Governmental Fund Financial Statements: The fund financial statements provide information about the District's funds. Separate statements for each governmental fund are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. The District reported the following major governmental funds in the accompanying financial statements: General Fund - The General Fund is the main operating fund of the District. All financial resources, except those required to be accounted for in another fund, are accounted for in the General Fund. Capital Projects Fund - The Capital Projects Fund is used to account for all capital purchases.
17
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B.
Basis ofAccounting The District-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when "measurable and available." The District considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Those revenues susceptible to accrual are property taxes, certain charges for services and interest revenue. Non-exchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, include taxes, grants, entitlements, and donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The District may fund programs with a combination of cost-reimbursement grants and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The District's policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.
C.
Property Taxes
Revenue is recognized in the fiscal year for which the tax and assessment is levied. The Counties of Marin and Sonoma levy, bill and collect property taxes and special assessments for the District; the Counties remit the entire amount levied and handle all delinquencies, retaining interest and penalties. Secured and unsecured property taxes are levied on January I of the preceding fiscal year. Secured property tax is due in two installments, on November I and February I, and becomes a lien on those dates. It becomes delinquent on December 10 and April I 0, respectively. Unsecured property tax is due on July 1 and becomes delinquent on August 31. The term "unsecured" refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the personal property being taxed.
18
MARIN/SONOMA MOSQIDTO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property tax revenue is recognized in the fiscal year for which the tax is levied. Marin and Sonoma Counties distribute property tax (termed "settlements") under the Teeter Plan, which allows the District to receive all property taxes in the year in which they are levied. The Counties retain any collections of interest, penalties and delinquencies under this plan. Sonoma County's Teeter Plan includes current year secured and supplemental ad valorem taxes but does not include any direct charges (benefit assessments) or unsecured taxes. A settlement apportionment for 95% of unsecured property taxes is received in October, with the remainder distributed in June. Secured property taxes are received in three settlements and apportioned as follows: 55% in December, 40% in April and 5% in June.
D.
Budgets and Budgetary Accounting The District follows the procedures established by the State of California for special districts in establishing the budgetary data reflected in the financial statements. During the year, the General Fund was the only fund for which a budget was required.
E.
Inventory Inventories consist primarily of pesticides and are stated at cost (first-in, first-out basis) and are recorded as expenditures at the time the inventory is consumed.
F.
Compensated Absences Accumulated unpaid employee vacation and compensated hours, are recognized as liabilities of the District to the extent they vest. Sick leave has also been included as employees receive 50% of their accumulated sick leave upon termination of employment. The liability is recorded in the Statement of Net Position. The General Fund has been used to liquidate compensated absences. At June 30, 2013, the balance of compensated absences was $361,572, of which $161,232 was estimated to be the current portion.
G.
Use of Estimates The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and, as such, include amounts based on informed estimates and judgments of management with consideration given to materiality. Actual results could differ from those amounts.
19
MARIN/SONOMA MOSQIDTO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H.
New Accounting Pronouncements The District has implemented the requirements of the following GASB Pronouncement: GASB Statement No. 63 - In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. In addition to assets, the statement of financial position or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period( s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2011. This Statement required certain financial statement titles and classification of fund equity to be changed in the financial statements for fiscal year ending June 30, 2013.
INOTE 3 - CASH AND INVESTMENTS I A.
Policies and Classification California Law requires banks and savings and loan institutions to pledge government securities with a market value of 110% of the District's cash on deposit, or first trust deed mortgage notes with a market value of 150% of the deposit, as collateral for these deposits. Under California Law this collateral is held in a separate investment pool by another institution in the District's name and places the District ahead of general creditors of the institution. The District's investments are carried at fair value, as required by generally accepted accounting principles. The ·nistrict adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. The District's cash and investments consist of the following at June 30, 2013: Cashon hand Deposits with fmancial institutions County of Marin Treasury
$350 33,181 9,603,484
Total cash and investments
$9,637,015
20
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
INOTE 3 - CASH AND INVESTMENTS (Continued) The District has authorized staff to deposit cash with the Marin County Treasurer in a series of pooled accounts with cash from various other governmental entities within the County, for investment purposes. The County's investment policies are governed by State statutes. In addition, the County has an investment committee, which prescribes written investment policies regarding the types of investments that may be made. The policies limit amounts that may be invested in any one financial institution or amounts, which may be invested in long-term instruments. Interest earned from such time deposits and investments is allocated quarterly to the District based on its average daily cash balances. The fair value of the account at June 3 0, 2013 was provided by the County Treasurer. !NOTE 4-CAPITALASSETS
I
Purchased capital assets are stated at historical cost or estimated historical cost when original cost is not available. Donated capital assets are recorded at their estimated fair value at the date of donation. The District's policy is to capitalize all capital assets with costs exceeding a minimum threshold of $500. Depreciation is recorded using the straight-line method over the estimated useful lives of capital assets which range from 20 to 50 years for structures and improvements, 3 to 40 years for office equipment, 3 to 20 years for office furniture, 10 to 20 years for field equipment, and 5 to 15 years for vehicles. Capital asset activity for the fiscal year ended June 30, 2013, was as follows: Balance June 30, 2012 Capital assets not being depreciated: Land Total capital assets not being depreciated Capital assets being depreciated: Structures and improvements Office equipment Office furniture Field equipment Vehicles Total capital assets being depreciated Accumulated depreciation: Structures and improvements Office equipment Office furniture Field equipment Vehicles Total accumulated depreciation Total capital assets, being depreciated, net Capital assets, net
Additions
Retirements
Balance June 30, 2013
$675,000
$675,000
675,000
675,000
6,665,681 635,627 61,910 239,604 2,029,254
5,526 125,333
(159,527)
6,665,681 607,447 51,316 245,130 1,995,060
9,632,076
139,183
(206,625)
9,564,634
(1,447,726) (316,803) (56,260) (172,434) (1,588,008)
(153,497) (49,690) (2,417) (13,915) (93,163)
159,527
(1,601,223) (329,989) (51,948) (186,349) (1,521,644)
(3,581,231)
(312,682)
202,760
(3,691,153)
6,050,845
($173,499)
($3,865)
5,873,481
$6,725,845
21
$8,324
($36,504) (10,594)
36,504 6,729
$6,548,481
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 5 -
NET POSITION AND FUND BALANCES
Net Position is measured on the full accrual basis while Fund Balances are measured on the modified accrual basis.
A.
Net Position Net Position is the excess of all the District's assets and deferred outflows over all its liabilities and deferred inflows, regardless of fund. Net Position is divided into three captions which is determined at the District-wide level, and is described below:
Net Investment in Capital Assets describes the portion of Net Position which is represented by the current net book value of the District's capital assets. Restricted describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the District cannot unilaterally alter. The District's Restricted Net Position is for pension obligations with MCERA. Unrestricted describes the portion of Net Assets which is not restricted to use.
B.
Fund Balance The District's fund balances are classified in accordance with Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the District to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding , sources, the District prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint:
Nonspendables represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact and assets not expected to be converted to cash, such as prepaids, notes receivable, and inventories are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, granters, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by formal action of the Board of Trustees which may be altered only by formal action of the Board of Trustees. Encumbrances and nonspendable amounts subject to Board commitments are included along with spendable resources.
22
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 5 -
FUND BALANCES AND NET ASSETS (Continued)
Assigned fund balances are amounts constrained by the District's intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the Board of Trustees or its designee and may be changed at the discretion of the Board of Trustees or its designee. This category includes encumbrances when it is the District's intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of the Capital Projects Fund which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual General Fund balance and residual fund deficits, if any, of other governmental funds. Within Unassigned fund balance, the Board has earmarked $1, 152, 755 for mosquito and vector emergencies.
I NOTE 6 - PENSION PLAN A.
General Plan The District contributes to the Marin County Employees' Retirement Association (MCERA). The MCERA provides retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members and their beneficiaries. MCERA is a cost sharing multipleemployer plan administered by the County of Marin. Employees vest after 10 years of service and may receive retirement benefits at the age of 50. These benefit provisions and all requirements are by the County Employees' Retirement Law of 1937, as amended and set forth in Section 34150 et. seq. of the government code.
B.
Funding Policy As of the June 30, 2012 actuarial date (the most current available), there is an accrued liability of $9,636,158 which is associated with the District's pension plan, for future benefits, and the district has $3,513,253 in a trust account with MCERA that would be used to offset this liability. MCERA determines contribution requirements using the Entry Age Normal Method. Normal benefit cost under this method is the level amount the District must pay annually to fund an employee's projected retirement benefit. This level percentage of payroll method is used to amortize any unfunded actuarial liabilities (UAAL). The difference between the accrued liability and the deposit in the trust account is being amortized over 17 years and will be funded by the District's annual required contribution, plus any additional optional contributions made by the District. MCERA uses the cost method of valuing the Plan's assets. An investment rate of return of 7.50% is assumed, including inflation at 3.25%. Annual salary is 3.25%, plus service-based rates. Cost of living adjustments are assumed at 1.9%, 2.7%, and 3.0% per year for substantially all District employees.
23
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 6 - PENSION PLAN (Continued) C
Contributions The MCERA members are required to contribute 6.74% to 11.66% of their annual covered salary, depending on their age at the time of hire. The District is required to contribute at an actuarially determined rate; the current rate is 29 .31 % of annual covered payroll. Out of the 29.31 %, 13.24% is the normal required contribution, while the remaining 16.07% is for the unfunded liability. The contribution requirements of plan members and the District are reviewed on an annual basis. The District's contributions to MCERA for the last three years ended June 30 were as follows:
June 30 2011 2012 2013
Annual Pension Cost (APC) $781,223 820,548 891,511
Actual Contribution $1,281,223 1,320,548 891,511
Percentage ofAPC Contributed 164.0% 160.9% 100.0%
Employer's Contribution Rate 6.24% - 11.29% 6.24% - 11.50% 6.74% - 11.66%
The Marin County Employee's Retirement Association (MCERA) Financial Statements can be obtained at One Mcinnis Parkway, Suite 100, San Rafael, California 94903.
INOTE 7 - OTHER POST EMPLOYMENT BENEFITS I The provisions of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, establishes uniform financial reporting standards for employers providing postemployment benefits other than pensions (OPEB). Required disclosures are presented below.
A.
Plan Description and Funding Policy The District provides post-employment medical benefits to retirees and retirees' spouses (for employees hired prior to July 1, 2009) as long as the retiree had 10 years of service vested with the District. Employees hired on or after July 1, 2009 will receive benefits for themselves only. Participants are required to have continuity of medical coverage upon retirement in order to receive these medical benefits. As of June 30, 2013, 20 retirees and/or retiree spouses were receiving benefits. The District's policy is to contribute an amount sufficient to pay the current year's premium. For fiscal year 2012-2013, the District contributed $149,437, which covered premiums, but did not include any additional prefunding benefits.
24
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 7 B.
OTHER POSTEMPLOYMENT BENEFITS (Continued)
Actuarial Assumptions The annual required contribution (ARC) was determined as part of a July 1, 2010 actuarial valuation using the projected unit credit actuarial entry age normal cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions included (a) 4.5% investment rate of return (based on a pay-as-you-go funding plan), (b) 3.25% projected annual salary increase, and (c) health care cost trend rates from 5% to 10% of medical benefits. The actuarial methods and assumptions used include techniques that smooth the effects of shortterm volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least tri-annually as results are compared to past expectations and new estimates are made about the future. The District's OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a 30 year amortization period.
C.
Funding Progress and Funded Status Generally accepted accounting principles permits contributions to be treated as OPEB assets and deducted from the Actuarial Accrued Liability when such contributions are placed in an irrevocable trust or equivalent arrangement. As of July 1, 2010, the most recent actuarial valuation date, the plan was zero percent funded. During the fiscal year ended June 30, 2013, the District contributed $149,437 to the Plan. As a result the District has recorded a Net OPEB Obligation, representing the difference between the ARC and the actual contributions, as presented below. The District's Net OPEB Obligation (NOO) is recorded in the Statement of Net Position and is calculated as follows: Annual required contribution (ARC) Interest on Net OPEB Obligation Adjustments to ARC
$1,303,765 119,436 (119,595)
Annual OPEB cost Contributions made - current year premiums
1,303,606 (149,437)
Increase in net OPEB Obligation
1,154,169
Net OPEB Obligation at June 30, 2012
2,753,047
Net OPEB Obligation at June 30, 2013
$3,907,216
25
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 7 -
OTHER POSTE:MPLOYMENT BENEFITS (Continued)
The Plan's annual required contributions and actual contributions for the last three fiscal years are set forth below:
Fiscal Year June 30, 2011 June 30, 2012 June 30, 2013
AnnualOPEB Cost (AOC) $1,140,562 1,221,128 1,303,606
Actual Contribution $152,099 158,057 149,437
Percentage of AOC Contributed 13% 13% 11%
NetOPEB Obligation (Asset) $1,689,976 2,753,047 3,907,216
The Schedule of Funding Progress presents trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Trend data from the July 1, 2010 actuarial study is presented below:
D.
Actuarial Valuation Date
Entry Age Actuarial Accrued Liability (Al
7/1/2010
$12,030,407
Actuarial Value of Assets (Bl $0
Unfunded Actuarial Accrued Liability (A-B1 $12,030,407
Funded Ratio (AIBl 0.00%
Covered Payroll
(Cl $2,684,455
Unfunded Actuarial Liability as Percentage of Covered Payroll [(A-B1fC] 448.2%
Deferred Compensation Plan The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is available for full-time employees. The Internal Revenue Services regulations allow an employer to designate a 457(b) Deferred Compensation Plan as an alternative to social security. The plan permits employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. However, participants are allowed to borrow against their account value, up to 50%. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights (until paid or made available to the employee or other beneficiary) are held in trust by third party administrators for the exclusive benefit of the plan participants and their beneficiaries as prescribed by Internal Revenue Code Section 457 (g). Accordingly, these assets have been excluded from the accompanying financial statements.
26
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE8-RISKMANAGEMENT The District participates with other public entities in a joint venture under a joint powers agreement which established the Vector Control Joint Powers Agency (VCJPA) which is a workers' compensation and general liability risk pool. The relationship between the District and VCJPA is such that VCJPA is not a component unit of the District for financial reporting purposes. The District reports all of its risk management activities in its VCJPA Fund. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Should there be a need for a retrospective adjustment due to adverse claim activity, the District may be assessed additional premiums. The VCJPA is a consortium of thirty-four (34) mosquito abatement or vector control districts in the State of California. It was established under the provisions of California Government Code section 6500 et seq. The VCJPA is governed by a Board of Directors, which meets four times per year, consisting of one member from each of the four regions as well as two trustees of the Mosquito and Vector Control Association of California (MVCAC). A risk management group employed by the VCJPA handles the day-to-day business. The following is a summary of the insurance policies in force carried by the Authority as of June 30, 2013: District District Limits Type of Coverage Deductibles $14,000,000 2,000,000 Statutory 100,000,000 1,000,000,000 35,000 150,000 1,000,000
General Liability Employment Practices Workers' Compensation Boiler and Machinery All-risk Property Auto Physical Damage (per vehicle) Business Travel Accident Group Fidelity
$50,000 25,000 50,000 2,500 10,000 500 none 15,000
As defined by Government Accounting Standards Board (GASB) Statement 10, the Vector Control Joint Powers Agency is "a claims servicing or account pool." VCJPA manages separate accounts for each pool member from whom losses and expenses of that member are paid, up to the retention limit. VCJPA purchases commercial excess insurance. The annual assessment of each member includes allocation for loss payments, expenses and excess insurance premiums. Annually, VCJPA evaluates the assets of each pool member in comparison with expected future liabilities. The "financial risk position" of each member is determined by subtracting case reserves, claims incurred but not reported amounts and claim development from members' deposit balances. If a negative risk position is found, a supplemental amount is added to the member's annual assessment. In accordance with GASB 10, the District has recorded its deposit with VCJPA as an asset at June 30, 2013. The District had no claims losses outstanding at June 30, 2013. Settled claims for the District have not exceeded coverage in any of the past three years.
The District has reserves of $465,072 on deposit with VCJPA for member contingencies to cover the District's self-insured retentions (SIR) for two claims in each type of coverage. The VCJPA has also purchased insurance to cover catastrophic losses.
27
MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2013
I NOTE 8 -
RISK MANAGEMENT (Continued)
Financial statements may be obtained from Vector Control Joint Powers Agency, I 831 K Street, Sacramento, California 958I4.
I NOTE 9-ACCOUNTING FOR PROPOSITION lA STATE BORROWING Proposition IA was passed by California voters in 2004 to ensure local property tax and sales tax revenues remain with local government thereby safeguarding funding for public safety, health, libraries, parks, and other local services. Provisions can only be suspended if the Governor declares a fiscal necessity and two-thirds of the Legislature concurs. Under the provisions of Proposition IA and as part of the fiscal year 2009-I 0 budget package passed by the California State legislature on July 28, 2009, the State of California borrowed 8% of property tax revenue, including those property taxes associated with the in-lieu motor vehicle license fees, triple flip in lieu sales taxes, and supplemental property taxes, apportioned to the District. The State was required to repay the $280,7I2 it borrowed from the District, plus interest of 2%, by June 30, 2013. As of June 30, 2013, the District received $129,982; the remaining $I50,730 was received subsequent to year-end.
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MARIN/SONOMA MOSQUITO AND VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROL AND
REQUIRED COMMUNICATIONS FOR THE YEAR ENDED JUNE 30, 2013
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MARIN/SONOMA MOSQIDTO AND VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROL AND
REQUIRED COMMUNICATIONS For the Year Ended June 30, 2013 Table of Contents
Memorandum on Internal Control .................................................................................................... I Schedule of 0th.er Matters ........................................................................................................ 3
Required Communications ................................................................................................................. 7 Significant Audit Findings ............................................................................................................ 7 Accounting Policies ................................................................................................................. 7 Unusual Transactions, Controversial or Emerging Areas ..................................................... 8 Estimates ................................................................................................................................... 8 Disclosures ................................................................................................................................ 9 Difficulties Encountered in Performing the Audit ................................................................. 9 Corrected and Uncorrected Misstatements ............................................................................. 9 Disagreements with Management ........................................................................................... 9 Management Representations .................................................................................................. 9 Management Consultations with Other Independent Accountants ....................................... 9 Other Audit Findings or Issues ................................................................................................ 9
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MEMORANDUM ON INTERNAL CONTROL
To the Board of Trustees Marin/Sonoma Mosquito and Vector Control District Cotati, California We have audited the basic financial statements of the Marin/Sonoma Mosquito and Vector Control District (District) for the year ended June 30, 2013, and have issued our report thereon dated August 21, 2013. In planning and performing our audit of the financial statements of the Marin/Sonoma Mosquito and Vector Control District as of and for the year ended June 30, 2013, in accordance with auditing standards generally accepted in the United States of America, we considered the District's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all such deficiencies have been identified. In addition, because of inherent limitations in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. We did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exit that have not been identified. Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe to be of potential benefit to the District. The District's written responses included in this report have not been subjected to the audit procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. This communication is intended solely for the information and use of management, Board of Trustees, others within the organization, and is not intended to be and should not be used by anyone other than these specified parties.
Pleasant Hill, California August 21, 2013
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Accountancy Corporation
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925.930.0902 925.930.0135 [email protected]
34 78 Buskirk Avenue, Suite 215
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Pleasant Hill , CA 94523
w mazeassociates.com
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MARIN/SONOMA MOSQUITO & VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROLS SCHEDULE OF OTHER MATTERS
2013-01:
Physical Inventory Counts of Vehicles and Pesticides
As part of the audit, we observed the physical inventory count performed by District staff over vehicles and pesticides. We selected a sample of vehicles and pesticide items to test to confirm if our counts matched the inventory detail maintained by staff. In doing so, we found that out of eleven items tested, four items did not match the detail. In response to this, we selected an additional sample and found no more deviations. We understand the employee who normally assists in the inventory count was out on a job site, therefore another employee was asked to assist. During this same timeframe, the Shop/Facilities Coordinator in charge of the count was also supervising another job and therefore was not able to double check that the items counted by the Vector Control Technician were done correctly. Inventory counts should be conducted accurately to ensure that inventory is properly reported on the financial statements. The potential impact is that the inventory balance on the financial statements may be under- or over-stated. We recommend that when the inventory count is conducted at year-end that there should be a second count to ensure that the amounts being reported are accurate. Management's Response: Management agrees with this recommendation and has instituted new procedures for conducting the annual pesticide inventory.
2013-02:
Purchasing Policy
During our testing of disbursements we noted that the District does not have a formal comprehensive purchasing policy. While disbursements are currently reviewed and authorized by the Finance/Benefit Manager and all checks are signed by the District Manager and a Trustee, it would be prudent for the District to have a formal comprehensive purchasing policy in place outlining approval limits, authorized and unauthorized purchases and formalizing the requirements for two signatures. Management's Response: Management agrees with this recommendation and plans to develop a comprehensive purchasing policy during FY 2013/14.
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MARIN/SONOMA MOSQUITO & VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROLS SCHEDULE OF OTHER MATTERS
2013-03:
Cross-Training for Payroll
During our review of the District's procedures over payroll, we noted that only the Finance/Benefit Manager has the ability to process payroll. It would be prudent for the District to designate a backup person who would be trained to process payroll, so that if the Finance/Benefit Manager was absent during a payroll processing period, there is a second party that could perform the payroll function. Management's Response:
Management agrees with this recommendation in principle and will investigate the feasibility of implementing this recommendation.
2013-04:
Other Post Employment Benefits
As of June 30, 2013, the District has a Net OPEB obligation (liability) of $3.9 million. This is due to the District not funding its annual required contributions. Subsequent to the completion of the audit, the District received its updated actuarial valuation over its Retiree Healthcare Plan, dated July 1, 2013. In reviewing the results of the updated actuarial valuation, we noted that the District's Actuarial Accrued Liability increased 25%, from $12 million to $15 million. If the District continues to operate on a payas-you-go basis, where only the current year retiree premiums are paid and no amounts are contributed to an irrevocable trust, the Net OPEB obligation will continue to grow and may become unsustainable. Management, in conjunction with the Board, should look closely at the funding strategy of the Retiree Health Plan and consider establishing an irrevocable trust and funding more than the current annual premiums.
Management's Response:
As part of the District's recent OPEB valuation report and actuarial study performed by Bartel and Associates, a memorandum was prepared that outlined various options to begin prefunding the District's OPEB obligations. District staff are currently in the process of investigating various plan options for an irrevocable trust and will submit a report and recommendations to the Board during FY 2013/14.
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MARIN/SONOMA MOSQUITO & VECTOR CONTROL DISTRICT MEMORANDUM ON INTERNAL CONTROLS SCHEDULE OF OTHER MATTERS 2013-05:
Upcoming Governmental Accounting Standards Board Pronouncements
The following comment represents new pronouncements taking affect in the next few years. We have cited them here to keep you abreast of developments: GASB 68 - Accounting and Financial Reporting for Pensions (an amendment of GASB 27) This Statement will have material impact on the District's financial statements. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, and deferred inflows of resources, and expense/expenditures. For defined benefit pensions, this Statement identifies the methods and assumptions that should be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service.
In financial statements prepared using the economic resources measurement focus and accrual basis of accounting, a single or agent employer that does not have a special funding situation is required to recognize a liability equal to the net pension liability. The net pension liability is required to be measured as of a date no earlier than the end of the employer's prior fiscal year (the measurement date), consistently applied from period to period. Note disclosure and required supplementary information requirements about pensions also are addressed. Distinctions are made regarding the particular requirements for employers based on the number of employers whose employees are provided with pensions through the pension plan and whether pension obligations and pension plan assets are shared. The following are the major impacts: •
This Statement requires the liability of employers and nonemployer contributing entities employees for defined benefit pensions (net pension liability) to be measured as the portion the present value of projected benefit payments to be provided through the pension plan current active and inactive employees that is attributed to those employees' past periods service (total pension liability), less the amount of the pension plan's fiduciary net position.
•
Actuarial valuations of the total pension liability are required to be performed at least every two years, with more frequent valuations encouraged. If a valuat~on is not performed as of the measurement date, the total pension liability is required to be based on update procedures to roll forward amounts from an earlier actuarial valuation (performed as of a date no more than 3 0 months and 1 day prior to the employer's most recent year-end).
•
The actuarial present value of projected benefit payments is required to be attributed to periods of employee service using the entry age actuarial cost method with each period's service cost determined as a level percentage of pay. The actuarial present value is required to be attributed for each employee individually, from the period when the employee first accrues pensions through the period when the employee retires.
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REQUIRED COMMUNICATIONS
To the Board of Trustees Marin/Sonoma Mosquito and Vector Control District Cotati, California We have audited the basic financial statements of the Marin/Sonoma Mosquito and Vector Control District for the year ended June 30, 2013. Professional standards require that we communicate to you the following information related to our audit under generally accepted auditing standards. Significant Audit Findings
Accounting Policies Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Marin/Sonoma Mosquito and Vector Control District are described in Note 2 to the financial statements. The following pronouncements became effective but did not have a material effect on the financial statements: GASB 60 - Accounting and Financial Reporting for Service Concession Arrangements The objective of this proposed Statement is to establish accounting and financial reporting requirements for service concession arrangements (SCAs ), which are a type of public-private or public-public partnership arrangement. SCAs include, but are not limited to: a.
Arrangements in which the operator will design and build a facility and will obtain the right to collect fees from third parties (for example, construction of a municipal complex for the right to lease a portion of the facility to third parties)
b. Arrangements in which the operator will provide an up-front payment or a series of payments in exchange for the right to access an existing facility (for example, a parking garage) and collect fees from third parties for its usage c.
Arrangements in which the operator will design and build a facility (for example, a new tollway), finance the construction costs, provide the associated services, collect the associated fees, and convey the facility to the government at the end of the arrangement.
T
Acco untancy Corporation
F
925.930.0902 925.930 .0135 [email protected]
3478 Buskirk Avenue, Suite 215
E
Pleasant Hill , CA 94523
w mazeassociates.com
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GASB 62 - Codification of Accounting and Financial Reporting Guidance Contained in PreNovember 30, 1989 FASB and A/CPA Pronouncements This Statement also supersedes Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, thereby eliminating the election provided in paragraph 7 of that Statement for enterprise funds and business-type activities to apply post-November 30, 1989 FASB Statements and Interpretations that do not conflict with or contradict GASB pronouncements. However, those entities can continue to apply, as other accounting literature, post-November 30, 1989 FASB pronouncements that do not conflict with or contradict GASB pronouncements, including this Statement.
GASB 63 - Financial Reporting o(Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position This Statement provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4. Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. Previous fmancial reporting standards do not include guidance for reporting those fmancial statement elements, which are distinct from assets and liabilities.
Concepts Statement 4 also identifies net position as the residual of all other elements presented in a statement of fmancial position. This Statement amends the net asset reporting requirements in Statement No. 34. Basic Financial Statements-and Management's Discussion and Analvsisfor State and Local Governments, and other pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets~ Unusual Transactions, Controversial or Emerging Areas We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the fmancial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate(s) affecting the District's fmancial statements: Management's estimate of depreciation is based on its established useful lives. We evaluated the key factors and assumptions used to develop the depreciation calculation in determining that it is reasonable in relation to the fmancial statements taken as a whole.
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Disclosures The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all/certain such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations We have requested certain representations from management that are included in a management representation letter dated August 21, 2013.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
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This information is intended solely for the use of the Audit Committee, Board of Trustees and management and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours,
Pleasant Hill, California August 21, 2013
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